Oil Rises in Volatile Session as Traders Assess Demand Signals

(Bloomberg) -- Oil rose in a low-volume session as many investors held off on trading while awaiting further clues to demand. 

West Texas Intermediate rose to trade near $79 a barrel, swinging in a $2.50 range during a volatile session. Traders are looking ahead to a slew of US economic data scheduled for the end of the week for insight into Federal Reserve thinking ahead of its May meeting.

Last week, the commodity dropped the most since the banking crisis in March amid signs of shrinking refining margins in Asia. But China’s Golden Week holiday could spur increased jet fuel consumption from this weekend.

“There are a lot of traders sitting on the sidelines trying to figure out a direction,” said Carley Garner a Commodity Broker and Strategist at DeCarley Trading. “Traders are looking for a dip to get into; if we hold $75, we can start making a way higher.”

Crude has wiped out nearly all of the rally seen earlier this month after the Organization of Petroleum Exporting Countries and its allies announced surprise new production cuts. Citigroup Inc. said it was taken aback by the magnitude of the pullback in Asian refining margins, which is partly attributable to the ramp up of new Middle Eastern refineries.

Later this week, the Federal Reserve will release the last of its major reports on US jobs, inflation and consumer spending before its May policy meeting. Additionally, some of the world’s biggest oil majors, including Chevron and Exxon, will report their first-quarter earnings on Friday. 

©2023 Bloomberg L.P.